Sarah’s husband, Tom, convinced her to become a family business director for tax purposes, assuring her that it was for her benefit and just a formality. Tom arranged her engagement with his accountant, who had completed his sole trader accounts and provided copies of Sarah’s identification documents for verification. Tax returns and compliance documents were prepared based on Tom’s instructions. He often brought the documents home for Sarah to sign without giving her the opportunity to read them.
During an account review, it was found that the company took a $400,000 loan secured on Sarah’s home, with her as the sole director, but Tom made all the business decisions and gave instructions. When Sarah was contacted, she revealed she was separated from Tom due to family violence, had no knowledge of the loan, and had signed documents without reading them.
The company was failing, profits were transferred without her knowledge, and her home was at risk. The accountant offered support services and refused further work for Tom, who also was informed he could no longer use the accountant’s services.
Sarah never attended meetings – all contact was through Tom.
Tom provided all documents and instructions on Sarah’s behalf.
Sarah could not be contacted directly despite being the director.
Documents were taken home for signing – no opportunity to confirm Sarah’s genuine consent.
$400,000 loan secured against Sarah’s home, yet she appeared uninvolved in the decision.
Tom gave all instructions but was not the legal officeholder responsible for the loan or the company. Sarah held all the legal responsibility and liability.
Sarah didn’t understand the documents she had supposedly signed and was unaware of her liabilities.
The practitioner had never spoken directly to Sarah.
At onboarding: Verify Sarah’s identity, authority, and contact details directly with her, confirm who can give instructions for Sarah’s personal tax and company matters and document this clearly.
Before proceeding with director/guarantor arrangements: Ensure Sarah receives explanation of director duties, personal liability, and guarantees, ideally in a private discussion to ensure she understands the risks.
When indicators are recognised: pause work, document concerns, and arrange a private meeting with Sarah using safe contact details; assess whether the engagement can continue ethically.
If unable to obtain proper authority or confirm informed consent: decline/withdraw from the engagement, document reasons for withdrawal; provide Sarah with specialist service referral information.
The person giving instructions (Tom) had all the control, while the person legally responsible (Sarah) had no involvement, no information, and all the risk. Never proceed with arrangements that create significant liability for someone you haven’t spoken to directly and privately.
Elder abuse: Margaret and David
Margaret, 78, appointed her son David as Power of Attorney after a stroke. Her accountant of 15 years noticed David suddenly attending all meetings alone, claiming Margaret was “too tired” to come in.
David instructed the sale of Margaret’s business premises and transferred $200,000 to a joint account he shared with her, claiming it was “easier for managing her bills”. When the accountant requested a private meeting with Margaret, David became defensive, claiming she had dementia. The accountant sought clarification on the reason for the sale and transfers. David explained that the money was needed to pay for her care.
The accountant contacted Margaret directly and discovered she was alert, unaware of the property sale, and had no dementia. She thought David was only helping with shopping and bills. The accountant discovered David had been withdrawing cash for his own business debts while Margaret’s bills went unpaid.
The accountant referred Margaret for legal assistance and financial counselling. Margaret didn’t want David to get into trouble – she just wanted him to stop taking money. With mediation, they resolved the situation and David got help for his business.
David suddenly attended alone, claiming Margaret was unavailable.
Significant asset sale without Margaret’s direct confirmation.
Funds moved to a David-controlled joint account with large withdrawals.
David was defensive when asked for a private meeting with Margaret.
Claims of dementia are inconsistent with Margaret’s known history.
Margaret’s bills are unpaid despite large withdrawals.
Instructions appeared to benefit David personally, not Margaret.
POA used beyond what Margaret understood or intended.
Check the POA document and scope, and confirm instructions are within it.
Request private confirmation with Margaret using verified contact details.
Document concerns and seek guidance from elder abuse services.
Recommend independent legal advice for Margaret.
When someone with POA becomes defensive about you speaking directly to the principal, take immediate action.
Appointed without consent: Christine (Australia)
Christine’s ex-husband Mark appointed her as sole director of his five companies without her consent. Over five years, Mark served as de facto director while instructing various accountants to manage the business accounts and Christine’s tax affairs. One accountant accepted instructions via a fake email impersonating Christine; another relied on Mark to obtain her signature. Christine’s tax account was accessed, wages were falsely reported under her TFN, and tax returns were submitted, all without her knowledge or consent. Tax refunds were paid into Mark’s bank account. Amending the fraudulent tax returns meant Christine had to repay the refunds to the ATO (due to related party rules). A debt waiver application has been made to the finance minister.
Christine never attended meetings or provided instructions herself – all contact was through Mark.
Email address purporting to be Christine’s was actually controlled by Mark.
Mark transported documents for “Christine’s signature” rather than Christine attending in person.
Christine was director on record but could not be contacted directly.
Tax refunds for Christine’s returns were paid into Mark’s bank account (not hers).
Wages reported under Christine’s TFN but she received no income.
The person giving all instructions (Mark) was not the legal director/taxpayer.
Multiple accountants over time – potential pattern of Mark changing professionals when questioned.
Christine had no access to her own tax information or business records.
At onboarding: verify identity and engagement directly with Christine. Never accept instructions via an unverified third party.
Confirm authority for tax account access and ensure lodgements are authorised by the actual taxpayer.
Verify contact details independently – not through Mark.
When suspicion arises (impersonation, fake email, inconsistent identity), stop immediately, escalate internally, and decline to act until authority is confirmed.
Flag to the ATO that returns may have been lodged without taxpayer’s knowledge.
Provide Christine with information on ASIC’s non-consenting officeholder process and support referrals.
Document all steps and concerns.
Used and liable: Laura (Australia)
Laura’s ex-husband Paul used her ABN to trade. Two years later, his accountant advised that operating as a company would be beneficial. As Paul has a criminal record barring him from holding the required business licence, he instructed the accountant to set up a company with Laura as sole director.
Laura only became aware of this when the ATO contacted her about unpaid company taxes – just after discovering Paul had left the country with another woman. Laura contacted the accountant, who said the accounts were overdue and needed updating, despite her having no prior dealings with him. Concerned about penalties, Laura instructed the accountant to file the tax returns, unknowingly increasing her exposure to director liability. The tax debt increased substantially, and she was issued a lockdown Director Penalty Notice. Because she acted as director (by instructing the lodgements), Laura is excluded from director defences and remains fully liable with no legal recourse.
Laura also discovered a personal income tax debt – her TFN had been used since 2015 to report income she never received on tax returns the accountant prepared without her consent. The ATO granted permission to submit amended returns that corrected this debt.
Laura had no involvement with the business or accountant, yet her ABN was used to trade.
Company set up with Laura as sole director without her instruction or knowledge.
All instructions came from Paul, who had legal restrictions preventing him from operating the business.
Accountant prepared returns and financials without direct engagement from Laura.
Laura only contacted by ATO after debts arose – never during trading years.
Tax returns lodged for Laura for years where she had no knowledge of activity.
Income reported under Laura’s TFN that she never earned.
Paul suddenly disappeared overseas when debts surfaced, indicating concealment.
Accountant proceeded with filings when authority and consent were unclear.
Pattern of Paul using Laura’s identity to circumvent his own legal restrictions.
Refuse services where the individual (Laura) has not been directly engaged and authority is unclear.
Verify directly with Laura that she consented to director appointment and understands director duties and personal liability exposure before any advice or lodgements.
Pause all lodgements while investigating authority, potential identity misuse, and relief pathways.
Refer Laura to specialist support services early (financial counselling, Tax clinic, legal centres, DFV).
Document risk advice given.
Where engagement is inappropriate or unsafe, disengage professionally, provide referral information.
Report suspected fraud/identity misuse to appropriate authorities.
Never prepare tax returns or lodge documents for someone you’ve never spoken to directly, especially when another party is giving all instructions, and the arrangement appears designed to circumvent legal restrictions.
